August Technical Analysis – TMF

As you can see in the graph, TMF has been range bound between $35 and $40 since May. It also looks ready to test the February uptrend again (as it did to kick off July’s trading)…looks like the current premium would cover a test of the $35 mark. The only issue with this fund is the corresponding option volume. During the month of June, only 64 option contacts were traded. Ideally, I want to see 1,000 contacts or more each month. With that level of activity, my trades are less than 1% of the total volume, which is sufficient liquidity to let me enter and exit my trades without influencing prices.

The option premiums were always lower than DRN, EDC and others, but price movement is less volatile too.

TMF isn’t range bound anymore! Talk about a surprise. The US gets downgraded by S&P, and you would expect that investors would start unloading US debt. Instead, demand for treasuries explodes, sending TMF through the $40 ceiling. What does that say about the situation in Europe?! I read a comment somewhere that even with all it’s problems, the US is the “least dirty shirt in the hamper”. Yikes.